Graduating from college is a huge achievement that should be rewarded handsomely. Unfortunately, most college graduates tend to be rewarded with a dire financial situation when they first leave school. Luckily, there are a few ways you can regain your financial footing as long as you plan ahead. Here are five tips any recent college graduate can use to get their finances back on track.
1. Establish a Budget
Determining how much you can comfortably spend each month should be your first step. You can leverage one of the myriad phone apps that automatically tracks your budget for you. Once you have a solid idea of how much income you bring in, you can set a hard limit to how much you spend. Just be sure to never exceed your budget on any given month. As any additional money comes through, considering putting it into your savings instead of blowing it on frivolous things.
2. Pay Down Your Student Loans
If you are like an overwhelming majority of college grads, then a hefty student loan is most likely hanging over your head. It is important to stay proactive when it comes to paying this off as quickly as possible. One thing many grads overlook is the vast amount of student loan grants that are just waiting to be claimed. Search for the best grants to pay off student loans in your local area. Securing a windfall in this manner will significantly reduce the amount of interest you will pay over time.
3. Set Aside an Emergency Fund
Life can throw you a curveball at any time. It is important to be ready for any emergencies that require large sums of money to effectively handle. If your car breaks down or you lose your job, you may need some additional money to get by. Try saving up a minimum of three months' worth of net pay to start. Most people end up saving half a year's pay once they have a bit more income flowing in.
4. Maintain Good Credit
You should strive to always pay your bills on time no matter what. Missing even one payment can mark your credit history for the next seven years. Having low credit means you will have to pay way more interest whenever you choose to borrow money. To raise your credit, try getting a card that you only make small purchases with. Using credit to pay for gas or groceries means it will always be easy to pay off at the end of each month.
5. Search for Ways to Save Money
It can be very tempting to spend big on clothes, technology, and nights out with friends. However, extravagant spending quickly becomes far more costly than anticipated. Consider ways to save money on clothing and other purchases. Try avoiding places like bars, sporting events, and festivals that charge a premium for their goods. Many of your friends are probably leaving college as well. Plan low-cost activities with them to help fend off any expensive temptations. Plan to visit the park, watch Netflix, or anything you love to do that doesn't require much money. If you want to splurge a bit, use services like Groupon to find great deals on otherwise costly ventures.
